On April 27, 2017, the Senate confirmed R. Alexander Acosta as the Secretary of Labor.  More than four months after President Trump took office, the U.S. Department of Labor finally had a new leader.

In the ten weeks since Secretary Acosta took office, the DOL has been very busy, with a number of important actions that directly affect employers.

  • Withdrawal of Joint Employer and Independent Contractor Interpretations. On June 7, the DOL announced that it was withdrawing its 2016 and 2015 Administrator Interpretations on joint employment and independent contractors.  With this action, the Trump Administration DOL confirmed that it would walk back from the more expansive interpretations of joint employer status and employment status in independent contractor situations adopted by the Obama DOL.  This action does not mean that employers no longer face risk from possible joint employer or independent contractor situations.  Instead, the DOL has indicated that it will return to the more traditional interpretations of these concepts used by the DOL under prior Administrations.
  • Revising the Persuader Rule. On June 12, the DOL issued a notice of proposed rulemaking to rescind and revise the enjoined so-called Persuader Rule.  The Obama-era Persuader Rule would have greatly expanded the reporting and disclosure requirements imposed on employers and consultants (including lawyers) with respect to labor relations advice and services under the Labor-Management Reporting and Disclosure Act’s “persuader activity” regulations.  The Obama-era Persuader Rule was permanently enjoined in November 2016, and it appears that the Trump DOL will be taking action to formally rescind the blocked rule and perhaps issue new regulations that could further modify existing reporting and disclosure requirements.
  • Return of Opinion Letters. On June 27, the DOL announced that its Wage and Hour Division will reinstate the practice of issuing opinion letters to provide guidance to employers and employees on the laws it enforces.  The Obama DOL had ceased issuing opinion letters in 2010, and the return of opinion letters will be welcomed by employers as a useful tool when interpreting the requirements of the Fair Labor Standards Act and other federal wage and hour laws.
  • Compliance Date Pushed Back for Electronically Submitting Injury and Illness Reports to OSHA. Also on June 27, the DOL’s OSHA announced that it was delaying the compliance date for electronic reporting of injury and illness data set forth in its May 2016 regulations from July 1, 2017 until December 1, 2017.  Under the Obama DOL, OSHA intended to use the electronic submission of this data to post injury and illness data on its website from all workplaces with 20 or more employees and for those in certain high-risk industries, making the information publicly available for unions, plaintiffs’ attorneys, and others.  In its June 27 press release, OSHA indicated that it intends to revisit and further consider the controversial rule.
  • Clarification of Position on the FLSA Overtime Exemption Regulations. On June 30, the DOL filed its Reply Brief with the Fifth Circuit Court of Appeals in the pending appeal of the preliminary injunction blocking the 2016 salary-related changes to the FLSA white-collar overtime exemption regulations from taking effect.  As we have discussed at length in this blog, the Obama-era regulations more than doubled the minimum weekly salary requirement for most white-collar overtime exemptions from $455 to $913.   In November 2016, a federal district court enjoined the regulations from taking effect on December 1, 2016, and the DOL appealed this decision.

In its Reply Brief, which was the first opportunity for the Trump DOL to state its formal position on the controversial regulations, the DOL argued that the injunction blocking the regulations should be reversed, because it was based on the legal conclusion (which the DOL still believes is erroneous) that the DOL lacks the authority to impose any minimum salary requirement as part of the exemptions’ tests.  However, the DOL asked the Fifth Circuit not to address the validity of the specific minimum weekly salary level of $913 set by the 2016 regulations, because the DOL intends to revisit the salary level through the issuance of new regulations in the future.

The DOL’s position, as set forth in its Reply Brief, raises additional questions and seemingly muddies the waters even further.  Specifically, if the Fifth Circuit ultimately agrees with the DOL’s position as stated its Reply Brief, what would be the fate of the challenged 2016 regulations and their $913 weekly salary requirement?  What would be the minimum salary required for the FLSA white-collar overtime exemptions before the DOL could issue new final regulations on the minimum salary level?  On June 27, the DOL sent a Request for Information related to the overtime rule to the Office of Management and Budget for its review, indicating that it intends to initiate the rulemaking process on this issue.  However, it will take many months, if not a year or more, for the DOL to complete the rulemaking process and issue a final rule to supersede the challenged 2016 overtime regulations.

Unfortunately, the DOL’s Reply Brief seemingly raised more questions than it answered, which is not good for employers who simply wish to know the legal requirements they must meet.  We now will await oral arguments on the appeal and a decision sometime in the future.

With a Secretary of Labor now in place, we expect the DOL to continue its recent pace of activity.  Stay tuned.

As we previously noted, the Pennsylvania General Assembly passed a law in November that amends the Pennsylvania Banking Code to permit the use of payroll debit cards, with certain conditions.  The law brought welcome clarity to this murky issue by authorizing formally the payment of employee wages via debit card and setting forth the requirements that need to be met to do so.  We discussed these requirements in our prior post on this topic.

This law is set to take effect on May 4.  Employers who wish to consider the payroll debit card option for paying employees (or who already are doing so) should review the specifics of the law to ensure they are in compliance when this law takes effect.

For much of 2016, employers and HR professionals were focused on preparing for the new Fair Labor Standards Act white-collar overtime exemption regulations.  The Department of Labor issued the final regulations on May 18, 2016, with an effective date of December 1, 2016.

As you may remember, the new regulations more than doubled the minimum weekly salary requirement for most white-collar overtime exemptions from $455 to $913.  The new regulations contained a number of additional provisions, the vast majority of which were not viewed favorably by employers.

And then, right before Thanksgiving, everything came to a screeching halt.  A federal district court issued on November 22, 2016, a nationwide preliminary injunction blocking the new FLSA white-collar overtime exemption regulations from taking effect on December 1.  Few anticipated the issuance of an injunction blocking the regulations, much less one a mere eight days before the regulations were set to take effect.  Happy Thanksgiving, indeed.

You may have noticed that we have not provided an update on this issue on this blog since the issuance of the injunction in November 2016.  That is because, frankly, not much of note has happened, either in the litigation in which the injunction was issued or regarding the issue in general.

As expected, the Department of Labor filed an appeal of the preliminary injunction on December 1, 2016.  The DOL initially sought to fast-track the appeal, asking the Fifth Circuit Court of Appeals for an expedited briefing schedule.  The motivation for this strategy was obvious.  The DOL’s leadership was set to change with the inauguration of Donald Trump in January, and the best hope for the new regulations was to have the injunction overturned before this change in leadership could affect the DOL’s litigation strategy.

The DOL’s strategy initially was successful, with the Fifth Circuit agreeing to an expedited briefing schedule, with all briefs regarding the appeal set to be filed by February 7, 2017.  However, on January 25, 2017 (i.e., shortly after the Trump administration took office), the DOL asked the Fifth Circuit for an extension of time to file its reply brief “to allow incoming leadership personnel adequate time to consider the issues.”  The Fifth Circuit ultimately agreed to extend the deadline for the DOL to file its reply brief until May 1, 2017.

Meanwhile, the federal district court that issued the preliminary injunction in November is still considering a summary judgment motion that could result in a final order being entered in that case.  Also, a motion filed by the Texas AFL-CIO in December 2016 to intervene as another defendant in the case also remains pending before that court.  The AFL-CIO sought to intervene because of its fear that the DOL’s new leadership will decide to cease defending the challenged regulations.

Time is not on the side of the currently enjoined FLSA overtime exemption regulations.  As the appeal of the injunction drags on into the spring, the likelihood of the Trump administration DOL withdrawing the appeal and abandoning the fight to defend the regulations grows.  If it does so, the injunction likely will become permanent, placing the final nail in the coffin of the controversial regulations.

So, as we have been saying for months, stay tuned.

In a surprising 11th-hour move, late Tuesday, November 22, 2016, a Texas federal court issued a nationwide preliminary injunction blocking the U.S. Department of Labor’s new Fair Labor Standards Act “white-collar” overtime exemption regulations from taking effect on December 1, 2016.

U.S. District Judge Amos Mazzant, who was appointed to the federal bench in 2014 by President Obama, issued the injunction stopping the DOL from implementing the new regulations.  In a case brought by 21 states against the DOL, Judge Mazzant found that the DOL acted without statutory authority when it issued regulations more than doubling the current minimum salary requirement and providing for automatic updates of the minimum salary amount every three years.

At the very least, the injunction will put on hold the effective date of the new regulations, which had been December 1.  This means that the existing FLSA regulations, with the minimum weekly salary requirement of $455, will remain the law of the land come December 1.

Employers now face considerable uncertainty.  Many employers already have made changes to employees’ salaries and overtime exempt statuses in anticipation of the new regulations taking effect next week.  Other employers have sent communications to employees announcing changes that will take effect next week, all in response to the new regulations.

However, the fate of the new regulations is now in serious doubt.  The Trump Administration is set to assume control of the White House in January.  While yesterday’s decision likely will be appealed by the DOL, it is not clear whether and to what extent the Trump DOL will pursue the appeal and continue to defend the regulations’ validity in court.

As a result of yesterday’s injunction, it now appears that the new regulations will not take effect on December 1.  What lies ahead for the regulations is less clear, creating frustrating uncertainty for employers and employees alike.

We have been following litigation in Pennsylvania challenging the use of payroll debit cards by employers to pay employees. In one such case, the Pennsylvania Superior Court recently ruled that an employer violated the Pennsylvania Wage Payment and Collection Law (WPCL) by requiring employees to accept their wages on a payroll debit card, rather than in cash or by check.

The Pennsylvania General Assembly has stepped in to modernize the law and bring some welcome clarity to this issue. On November 4, 2016, Governor Tom Wolf signed into law Act 161, which amends the Pennsylvania Banking Code to expressly permit the use of payroll debit cards, with certain conditions.  These conditions include the following:

  • Payment of wages by payroll debit cards must be optional for the employee, and the employer cannot mandate such use to receive wages;
  • The employer must comply with various notice and authorization requirements;
  • The card must allow one free withdrawal of wages each pay period and one in-network ATM withdrawal at least weekly;
  • The employee must have the ability to check the card’s balance electronically or via telephone without cost to the employee; and
  • There must be no fees associated with various actions associated with the card, including the issuance of the initial card and one replacement card per calendar year, the transfer of wages to the card itself, and for non-use of the card for a period of less than 12 months.

The Act makes clear that it supercedes any inconsistent provision in any other statute, rule, or regulation, confirming that payment of wages with a payroll debit card in compliance with the Act’s requirements will comply with the WPCL. The Act will take effect in 180 days of its enactment on November 4.

For employers who wish to use payroll debit cards to pay wages, Act 161 provides a blueprint for how to do so in a manner that complies with Pennsylvania law. These requirements are somewhat complicated, however, and should be followed closely. Also, Act 161 confirms that use of payroll debit cards in a manner inconsistent with its requirements will violate Pennsylvania law. Employers who wish to use this new technology to pay employees should keep these points in mind to avoid future legal trouble.

As regular readers of our blog know, we have been following a pending class action lawsuit challenging a Pennsylvania employer’s use of payroll debit cards to pay its employees. There has been a key development in that case.  The Pennsylvania Superior Court has issued a decision that affirmed that the employer at issue violated the Pennsylvania Wage Payment and Collection Law (WPCL) by requiring employees to accept their wages on a payroll debit card, rather than in cash or by check.

In Siciliano v. Mueller, a unanimous three-judge panel of the Superior Court noted that the Wage Payment and Collection Law authorizes payment of wages only “in lawful money of the United States or check.”  The Court concluded that the mandatory use of payroll debit cards that may subject users to fees was not consistent with the “plain language” of the WPCL.  While the Court noted that “[t]he use of a voluntary payroll debit card may be an appropriate method of wage payment,” it confirmed that mandatory use of cards that may trigger fees is not under current Pennsylvania law.

Unless and until the Superior Court’s decision is overturned or the General Assembly amends the WPCL to expressly authorize payment of wages via payroll debit cards that may trigger fees, their use in Pennsylvania presents risk for employers, particularly if employers do not give employees other options to receive their wages.  Pennsylvania employers should consider these risks when determining whether and to what extent they wish to use payroll debit cards, at least until the law is changed.

In a recent decision, the Third Circuit emphasized the need for employers to capture and compensate all hours worked by non-exempt employees, even if the employer pays the employees for break time that it could treat as non-compensable under the Fair Labor Standards Act.

In Smiley v. E.I. DuPont De Nemours & Company, the plaintiffs filed an FLSA collective action and Pennsylvania state law class action seeking compensation for unpaid time spent donning and doffing their uniforms and safety gear and performing other activities before and after their shifts.  This unpaid time averaged approximately 30 to 60 minutes per day.  The plaintiffs worked 12-hour shifts and, per DuPont’s written policy, were paid for a 30-minute meal break and two other 30-minute breaks per shift.  DuPont counted the paid break time as hours worked for overtime purposes, even though the FLSA did not require it to do so.  The paid break time always exceeded the unpaid pre-shift and post-shift donning and doffing time.

DuPont argued that the plaintiffs’ claims for unpaid overtime fail, because it voluntarily treated the break time as hours worked, effectively serving as an offset against the 30 to 60 minutes of daily unpaid pre-shift and post-shift time.  The District Court agreed with DuPont’s offset argument and dismissed the lawsuit entirely.

On appeal, the Third Circuit rejected the offset argument and overturned the dismissal.  After mentioning the FLSA’s “broad remedial purpose,” the Court observed that employers have some flexibility when considering whether to treat bona fide meal breaks as hours worked.  The Court also noted that the FLSA explicitly permits offsets against overtime pay only in three specific situations, none of which addressed paid meal breaks.

The Court concluded that nothing in the FLSA authorized the offsetting of discretionary compensation that the employer included in calculating the employee’s regular rate of pay.  Even though the FLSA did not require DuPont to pay for the meal and other breaks or to treat that time as hours worked, once it did so, it could not use that time as an offset against other time spent working that it did not count for overtime purposes.

In other words, using the strict FLSA definition, the employees had a total of 11 to 11 1/2 hours worked per day (including the pre-shift and post-shift activities and excluded the 90 minutes of break time) and were paid for 12 hours worked per day.  Nevertheless, the Court held that DuPont’s practice violated the FLSA.

The Smiley decision is an important reminder for employers to review their pay practices and ensure that all hours worked by non-exempt employees are captured and compensated.  Even if an employer goes beyond what the FLSA requires and pays an employees for meal breaks, that generosity cannot be used to offset other potential overtime violations.

The Third Circuit again reminded us that the FLSA exists to protect employees, not employers, and the need for technical compliance with its requirements.  Unless a pay practice is expressly authorized by the FLSA or its regulations, the pay practice may run the risk of creating potential class-based liability for even generous employers.

The calendar (if not the weather) tells us that fall is almost here. With the change in seasons comes another reminder that the effective date of the U.S. Department of Labor’s new Fair Labor Standards Act “white-collar” overtime exemption regulations is fast approaching.

Effective December 1, new rules that more than double the minimum weekly salary requirement for the FLSA’s white-collar overtime exemptions to $913 will be the law of the land. If an employer cannot show that an employee meets the requirements of one of the exemption tests, that employee will be legally entitled to overtime, and the employer could face significant potential liability for unpaid overtime pay, liquidated damages, and attorneys’ fees.

Now is the time for Pennsylvania employers to consider the following action items:

  • Identify those employees you currently treat as exempt from overtime pay and determine whether their salaries will meet the new threshold of $913 per week (i.e., $47,476 annually).
  • For those employees currently treated as exempt who earn less than $913 per week, consider whether to increase their salaries to meet the new salary requirement or convert the employees to non-exempt status and pay them for overtime worked. This decision will require an in-depth cost/benefit analysis that considers the employee’s pay, the hours worked by the employee, the employer’s ability to record and control or manage the hours worked, and the relative strength of the employer’s position that the employee meets the duties test for one of the exemptions.
  • Review all positions you treat as exempt, regardless of salary, and determine whether you could prove, if challenged, that the employee meets the duties test for one of the exemptions. For most of the FLSA’s white-collar exemptions, an employee can be treated as exempt only if the employee meets both the minimum salary requirement AND the duties test for the exemption. Simply paying a salary, even in excess of $913 per week, is not enough to exempt an employee from overtime pay.
  • Confirm that you are properly tracking all hours worked and calculating the overtime rate for your non-exempt employees. Even though the new regulations do not change the pay rules applicable to non-exempt employees, they likely will increase the number of non-exempt employees you have, making compliance in this area even more critical.

December 1 will be here before we know it, and much work needs to be done by employers to prepare for the changes that take effect on that date. Are you ready?

On April 17, 2016, Pennsylvania Governor Tom Wolf signed the Medical Marijuana Act (MMA), which legalizes medicinal marijuana in Pennsylvania. The MMA, which takes effect on May 17, 2016, includes various provisions related to employment, and we have received many questions regarding what employers must, can and cannot do as a result of the new law. The simple answer is that, for the time being, we do not believe that employers are required to take immediate action. No immediate changes to your drug and alcohol policies or how you deal with drugs in the workplace are necessary for now, but stay tuned.

The MMA requires the Department of Health (“Department”) to promulgate full regulations within 18 months, and the Department is also required to begin publishing temporary regulations no later than six months from the Act’s effective date. Accordingly, we expect further guidance before the end of 2016 and anticipate frequent changes to the rules and regulations surrounding the MMA and its interpretation thereafter.

So, what do you need to know about the law now?

  • The MMA contains an employment anti-discrimination provision that states as follows:

No employer may discharge, threaten, refuse to hire or otherwise discriminate or retaliate against any employee regarding an employee’s compensation, terms, conditions, location or privileges solely on the basis of such employee’s status as an individual who is certified to use medical marijuana. MMA §2103(b)(1).

This anti-discrimination provision seems clear; however, it does raise some unanswered questions.  Although more than 20 other states have legalized medicinal marijuana, for purposes of the MMA, an “individual who is certified to use medical marijuana” seemingly refers only to individuals certified under Pennsylvania law. It is unclear whether an employee who is certified in another state would be entitled to the protection of §2103(b)(1).  Also, keep in mind that it will take some time for Pennsylvania to implement the regulatory framework to begin the certification process, set up dispensaries and begin actually distributing marijuana.

  • Employers are not required to accommodate the use of medical marijuana at work and employers retain the ability to discipline employees for using marijuana at work. Along these lines, the MMA provides:

Nothing in this Act shall require an employer to make an accommodation for the use of medical marijuana on the property or premises of any place of employment. This Act shall in no way limit an employer’s ability to discipline an employee for being under the influence of medical marijuana in the workplace or for working while under the influence of medical marijuana when the employee’s conduct falls below the standard of care normally accepted for that position. MMA §2103(b)(2).

While employers retain the right to discipline users of medical marijuana if they are “under the influence” at work, we do not yet know what is meant by “under the influence.” It remains to be seen which definition of “under the influence” will apply to potential employee discipline.

  • The MMA prohibits certified users from performing certain safety-sensitive jobs while “under the influence” of medicinal marijuana, including: (1) operating or being in physical control of chemicals which require a permit issued by the federal government, state government, federal agency or state agency; (2) operating or being in control of high-voltage electricity or any other public utility; (3) performing any employment duties at heights or in confined spaces, including, but not limited to, mining; (4) performing tasks that the employer deems life-threatening to either the employee or any employees of the employer; and (5) performing any duty that could result in a public health or safety risk. MMA §510.
  • The MMA does not require employers to “commit an act that would put the employer or any person acting on its behalf in violation of federal law.” MMA §2103(b)(3). For example, an employer would not be required to accommodate medicinal marijuana use if such accommodation violates federal DOT regulations.
  • The MMA does not, currently, supersede an employer’s rights under the ADA. For example, under current interpretations of the law, employers are not prohibited by the ADA from discharging an employee who tests positive for marijuana, even if the use is pursuant to a valid prescription. This could change, however, as the MMA evolves and as we further understand how “under the influence” will be defined in Pennsylvania. Further, the EEOC may change its position on the protected nature of medical marijuana as more states allow its use.

As with any new law, we have much left to learn. The McNees Labor and Employment Group will be closely monitoring the implementation of the temporary and permanent MMA regulations. We will keep you advised as things develop and are hopeful that the temporary regulations will address some of our unanswered questions, including: (1) what is meant by “under the influence;” and (2) whether the anti-discrimination provisions apply to those certified to use medical marijuana in other states. In the meantime, should you have specific questions about the law, your policies or your employees, please do not hesitate to contact any member of the McNees L&E Group.

For what seems like an eternity, we have been waiting for the U.S. Department of Labor to issue the new Fair Labor Standards Act “white-collar” overtime exemption regulations. While many have speculated on when the final regulations would be issued, most assumed that the DOL would wait until the summer or fall of 2016 to issue the new regulations.

In a somewhat surprising move, the DOL on Tuesday sent its final regulations to the Office of Management and Budget (“OMB”) for its review. OMB review is the final step in the rulemaking process and can take anywhere from a few weeks to a few months. After completion of OMB review, the final rule will be published in the Federal Register and likely take effect 60 days after publication.

It now appears that, rather than in late 2016, the new FLSA white-collar overtime regulations will be issued this spring or early summer. We do not yet know what the final regulations will contain, but based on the content of the proposed regulations issued last June, we can assume that the changes to the FLSA white-collar exemptions will be significant and result in many currently exempt employees losing their exempt status. Specifically, we expect a sizable increase in the minimum salary requirement, as the proposed regulations would double the current $455 minimum weekly salary requirement to approximately $970 (i.e., over $50,000 per year).  In addition, we anticipate changes to the duties tests for a number of these exemptions, the details of which are currently unknown.

With Tuesday’s news, it is even more vital for employers to consider how they will respond to the new overtime exemption tests.  Many employees currently treated as exempt from overtime will need to be reclassified as non-exempt or otherwise have changes made to their compensation and/or duties to remain exempt.  Employers likely will have only 60 days to respond to the new rules and make necessary changes to employees’ compensation and overtime exempt status.  Now is the time for employers to consider the impact that the anticipated changes would have on the status of their exempt workforce and determine next steps.